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2015 Annual Report of mBank S.A. Group
mBank S.A. ul. Senatorska 18, 00-950 Warszawa tel. +48 22 829 00 00, fax +48 22 829 00 33 mBank.pl
2015 Annual Report of mBank S.A. Group
Letter of the President of the Management Board of mBank S.A. to the Shareholders
Dear Shareholders, In spite of adverse developments in the external environment, 2015 was a very successful year for mBank Group. Net profit attributable to the shareholders of mBank reached PLN 1,301.2 million, which represents an increase of 1.1% year on year. This satisfying result was achieved under conditions of strong pressure exerted both by factors affecting the revenue of financial institutions and by unfavourable one-off events faced by the Polish banking sector. Following the interest rate cuts in October 2014, the Monetary Policy Council (RPP) decided to continue the easing and reduced the reference rate by another 50 basis points to the historically low level of 1.5%. As a result, net interest margin decreased further in H1 2015. As another factor adversely impacting the revenue of the sector, the interchange fee on cashless card transactions in Poland was reduced to one of the lowest levels in Europe. The interchange fee decreased from 0.5% to 0.2% or debit cards and 0.3% for credit cards as of 29 January 2015. However, thanks to dynamic business expansion, which was additionally supported by robust economic growth, including continued recovery of consumption and investments, mBank Group generated its historically highest core income of PLN 3,408.5 million. Net interest income increased by 0.8% driven by growing lending in key segments. Net fee and commission income decreased by 0.5% year on year as rising transactional activity of clients was insufficient to bridge the gap opened by the interchange fee reduction within such a short time horizon. In 2015, the Polish banking sector suffered its first bankruptcy in 15 years. Following the insolvency of Spółdzielczy Bank Rzemiosła i Rolnictwa w Wołominie, banks had to contribute an additional PLN 2.0 billion to the Bank Guarantee Fund (BFG) to pay out guaranteed deposits. The total contribution of mBank and mBank Hipoteczny reached PLN 141.7 million. Another significant cost in Q4 2015 was a contribution to the Borrower Support Fund set up at Bank Gospodarstwa Krajowego for clients in a difficult financial position. The contributions were determined pro rata to the held portfolio of housing mortgages which are more than 90 days overdue. The contribution of mBank Group amounted to PLN 52.1 million. These unforeseen costs were offset in 2015 by the sale of the subsidiary BRE Ubezpieczenia TUiR to AXA Group as well as the sale of the Bank’s interest in PZU. On 27 and 30 March 2015, after all required regulatory approvals were granted, the sale to the strategic insurance partner was closed, including agreements establishing long-term co-operation between mBank Group and AXA Group in the distribution of life and non-life insurance products. As a result, mBank clients gained access to a wide range of insurance products offered via the online and mobile platforms and in brick-and-mortar branches. The one-off positive impact of the sale on the pre-tax profit of mBank Group recognised in Q1 2015 was PLN 194.3 million. In early December, the Management Board of mBank decided to divest and sell its interest in PZU equal to 0.55% of the company’s share capital. The selling price was set at PLN 37.75 per share and, net of the cost of sale, the revenue was PLN 125.0 million. As a result, mBank Group earned a total revenue close to PLN 4.1 billion in 2015, representing an increase of 3.9% year on year. Based on the reported results, the cost/income ratio was 50.2%; net of the positive and negative one-offs, the normalised C/I was 49.3%, compared to 44.9% a year earlier. Superior efficiency is a key attribute of mBank’s operational model, and its structural cost advantage consistently sets the Group apart from other financial institutions in Poland. The recurrent administrative expenses including depreciation and amortisation increased by 5.1% year on year to PLN 1,860.5 million in 2015. This was mainly driven by a nearly double regular contribution to BFG as its rate was raised from 0.137% in 2014 to 0.239% of total risk exposure. As a result, mBank’s contribution increased by PLN 65.6 million year on year. The Group’s headcount grew by 223 FTEs in 2015, resulting in a modest increase of personnel costs. To ensure highest quality and security of mBank’s electronic platform, the IT expenditure increased while other material costs remained at the level of 2014. mBank Group’s cost of risk was 54 basis points in 2015. Net loan loss provisions decreased by 18.4% year on year to PLN 421.2 million. The high exchange rate of the Swiss franc prevailing since January 2015 did not impair the capacity of mBank’s retail clients to repay their debt, and the solid economic conditions and relatively low unemployment supported the quality of the loan portfolio. Furthermore,
mBank’s understanding of sector risks prevented excessive exposure to sectors in a weaker position and ensured a diversified corporate portfolio with a well-distributed structure. As a result, mBank Group’s NPL ratio decreased to 5.7% at the end of 2015 and the coverage ratio rose to 58.9%. Consequently, return on equity decreased to 11.8% from 13.1% in 2014. The ROE of the Group should be considered from the perspective of the continuous improvement of the capital position. This approach derives from regulatory initiatives designed to enhance the stability and security of the Polish sector and its resilience to extreme market scenarios. Following announcements made earlier in the spring, on 23 October 2015 the Polish Financial Supervision Authority (KNF) issued individual recommendations imposing additional capital requirements on banks with significant exposures to FX residential mortgage loans. mBank’s capital buffer was 4.39 percentage points, of which at least 75% or 3.29 percentage points must consist of Tier 1 capital. It was the highest additional requirement among all Polish banks, largely due to the fact that mBank calculates the total risk exposure under the advanced internal rating-based approach (AIRB). As a result, risk weights for mortgage loans denominated in foreign currencies are much lower at mBank than under the standardised approach followed by most institutions in Poland, which was not a factor considered in the single methodology applied to all players in the sector. However, even in view of such high requirements imposed by KNF, mBank Group’s capital ratios are still well above the regulatory minimum. It should be noted that the volumes and the sales of new loans grew dynamically. Gross loans of mBank Group increased by 5.2% year on year to PLN 81.4 billion in 2015. The production of new mortgage loans increased by 41.8% year on year in 2015. Importantly, 42.3% of mortgage loans granted in Poland were disbursed by mBank Hipoteczny, adding to the pool of assets eligible for covered bond issues. The sales of consumer loans, whose rising volumes contribute to a steady improvement of net interest margin, grew by 8.5% year on year. It should be emphasised that corporate lending excluding reverse repo transactions increased by a high 11.8% year on year in 2015 with a strong contribution of term loans granted to small and medium-sized enterprises.
to largely step up lending in both countries as the gross balance-sheet volumes increased by 31.0% year on year. In turn, Corporates and Financial Markets reported a pre-tax profit of PLN 617.6 million in 2015, a decrease of 8.2% year on year due to a much lower net trading income and gains on investment securities. In 2015, the Group expanded its offer for SMEs, steadily building up mBank’s position in this market segment which has a promising growth potential. In 2015, mBank Group was very active in the implementation of strategic initiatives. mBank Hipoteczny issued more than PLN 1.5 billion of covered bonds, a record on the Polish market. Following its divisionalisation, mLeasing strengthened the foundations of its business expansion in the corporate and retail segments and reported significant growth in the SME segment. The subsidiary moved up to the second position among leasing companies present on the Polish market in 2015. Dom Maklerski mBanku was also active in major transactions on the Warsaw Stock Exchange. In April 2015, with the support of mCorporate Finance as a financial advisor and mBank as underwriter, it completed the IPO of the German manufacturer of aluminium wheels Uniwheels AG. The IPO of PLN 504 million was the biggest public offering on the Polish market since the end of 2013. mBank Private Banking celebrated its 20th anniversary in 2015. This coupled with business successes, including a nearly 21% increase in total assets under management, which in total with mWealth Management exceeded PLN 12.0 billion at the end of 2015. To summarise, despite many new adverse regulatory developments, which will be faced by the banks in 2016, including the bank tax and increased capital requirements, I am certain that the expansion of the Group’s business results based on client relationships will remain on a growth trajectory. mBank has competitive advantages which allow it to grow its strategic segments under any market conditions. Our excellent business and advisory competences, professionalism and state-of-the-art technologies allow us to acquire new clients in three countries and provide them with top-quality service. Coupled with fast developing distribution channels, further growth of transactional activity as well as active cross-selling, this ensures that mBank’s revenue will grow steadily. I wish to thank you, our Shareholders, for your confidence and support. Let me assure you that our company has key advantages which will enable us in the coming years, despite the many challenges and costs, to grow our business model successfully and deliver satisfying results.
mBank continued to develop its deposit base, which reached PLN 81.1 billion at the end of 2015, representing an increase of 12.0% year on year. The balances of retail on-sight accounts, which include current accounts and savings accounts, grew by a strong 16.1% year on year. Corporate deposits increased at an even more impressive rate: balances of corporate current accounts alone grew by 24.3% year on year in 2015. Importantly, the growth rate was greater than client acquisition, which suggests that it resulted from improved transactional activity, a key objective of mBank’s efforts focused on offering the most convenient online and mobile transactional banking systems. These growth rates helped to further improve the loan-to-deposit ratio, which stood at 96.7% at the end of 2015, compared to 103.0% a year earlier. The ratio, brought down to less than 100% after many years, demonstrates the success of the long-term restructuring of our balance sheet and growing independence of funding provided by Commerzbank.
I also thank our employees whose commitment and engagement contributed to the success of mBank Group in 2015. I believe that we are relatively well prepared to leverage our strengths and successfully face the market conditions in 2016.
One of the key factors differentiating mBank in the Polish banking sector is the capacity of organic growth, which has become our key competitive advantage. The results of client acquisition in 2015 were once again more than satisfactory. Our corporate client base increased by 1,775 companies and stood at 19,562 at the year’s end. The number of mBank’s retail clients increased by 177.6 thousand in Poland and as much as 57.6 thousand in the Czech Republic and Slovakia. We also added 160.7 thousand accounts to the Orange Finanse client base. All in all, mBank now serves 4,947.3 thousand clients on the three markets. A key project in 2015 was the migration of former MultiBank transactional service users to the mBank platform, successfully completed in October. We also continued to develop and improve our mobile application to ensure that clients can conveniently manage their finance wherever they are.
Cezary Stypułkowski
The results of the Retail Banking Line improved year on year as the pre-tax profit stood at PLN 1,060.7 million. The improvement was driven by the booked one-off revenue on the sale of the insurance subsidiary, while the core income remained under pressure due to the interest rate cuts and reductions of the interchange fee on card transactions. mBank’s foreign branches in the Czech Republic and Slovakia also improved their results and made a bigger contribution to the performance of retail banking, not only in the acquisition of clients and deposits but also the steadily growing volume of loans and revenue. Intensified sales initiatives and the re-positioning of the offer helped
I thank the Supervisory Board for its close co-operation and unwavering support.
Yours faithfully,
Top 4.6.1 Letter of the Chairman of the Supervisory Board of mBank S.A. to Shareholders Dear Shareholders,
Year 2015 on the one hand gave us reasons to feel proud and satisfied, but on the other hand was filled with doubts concerning the future of the banking sector in Poland. It was yet another year which proved that the change of name and brand in 2013 was the right decision, was profitable for the company and contributed to the fact that the financial results and the general state of the bank are in a very good condition. mBank became the synonym of youth and modernity, the icon of mobility and clientfriendliness. Holding an account with it is very prestigious. Our constantly improved website, often appreciated and awarded for a pro-client approach, simplicity and user-friendliness, is one of the main things to be proud of. In 2015, mBank developed its client base, business model and service technology. mBank finalised the key technological undertaking, i.e. the migration of MultiBank clients to the mBank platform, with great success. It will allow for better adjustment of our offer to the needs of clients and will lower the costs of servicing them. The Orange Finance project continued to be developed with very good results, similarly as our activities in the Czech Republic and Slovakia.
Stefan Schmittmann has been a member of the Supervisory Board for 6 years. On behalf of the Supervisory Board of mBank S.A., I would like to thank Mr Schmittmann for his long-standing commitment and great cooperation with our bank. He was instrumental in safeguarding the bank’s growth connected with a prudent approach to risk management. We wish him the best of luck in his future endeavours.
In 2015, mBank acquired 396 thousand new clients in the Retail Banking segment, and the value of funds deposited by retail clients increased during 12 months by 17%. Further increase in card transactions is also worth mentioning. Their number grew year on year by 36%. This allows the bank to hold a 12% market share in non-cash transactions in Poland. We are still developing and streamlining our credit activity on the retail market, especially in the scope of consumer loans the balance of which increased by 12%.
The bank achieved positive results also in the Corporates and Financial Markets segment. The client base of corporate banking grew by 1,775 clients. The balance of deposits and credit receivables increased in this area by 17% and 6%, respectively. The most dynamic growth was reported with regard to cooperation with clients from the large company segment. In 2015 the Supervisory Board analysed all processes taking place at mBank S.A. with due diligence, remaining in regular contact with the Management Board of the Bank. As in previous years, Members of the Supervisory Board seated on four standing Committees: The Audit Committee, the Risk Committee, the Remuneration Committee and the Executive Committee. The current composition of the Supervisory Board is characterised by its focus on professionalism of its members exercised by selecting top specialists with broad knowledge, professional experience and skills. On 24 November 2015 the composition of the Supervisory Board of mBank S.A changed. Stefan Schmittmann, who stepped down from his position and decided to retire after many years of work for the Commerzbank Group AG, was replaced by Marcus Chromik, who was also appointed Chairman of the Risk Committee of the Supervisory Board as of 1 January 2016.
Marcus Chromik has been Chief Credit Risk Officer of Commerzbank's Core Bank (GRM-CRC) since 2012. Earlier, for more than three years, he served as Market Risk Officer for Commerzbank's Corporates & Markets segment where he was responsible for market and liquidity risk management. Marcus Chromik, who holds a PhD in nuclear physics, started his professional career with McKinsey in 2001. Afterwards, he joined Postbank Group in 2004, where he held various executive positions, and was responsible, among others, for new projects and syndication, liquidity management, and treasury.
Finally, on behalf of the entire Supervisory Board, I would like to thank the Management Board of mBank for effective and harmonious cooperation, and you, our Shareholders, for your trust in the operation of our bank. I hope that the current year will be as successful as the previous one both in terms of reaching goals and effective cooperation. Maciej Leśny Chairman of the Supervisory Board
Top 4.6.8 Assessment of the Supervisory Board of mBank S.A. regarding the Bank’s standing in 2015, including assessment of the internal control system, the system of managing the risk significant for the Bank, operation of the compliance area and the function of the internal audit.
At the same time, the Supervisory Board expresses hope that the efforts will be continued in 2016 and in the coming years. The Supervisory Board thanks also the Shareholders for their trust in mBank’s operation.
Based on: Rule II.Z.10 of the Best Practice of WSE Listed Companies 2016
Assessment of the internal control system and the system for managing the risk significant for the Bank
2015 was a year of improvement of the Polish economy. GDP grew at the end of 2015 by 3.6% YoY, compared with 3.5% in 2014, in accordance with the updated estimation of the Central Statistical Office. The net profit of the Bank in 2015 amounted to PLN 1,271 million. This result equals the one of last year and is 1% lower than planned. Taking into account various negative surprises brought to the banking sector by the social and economic environment in 2015, this result may be considered quite good. The Supervisory Board thanks all employees of the Bank for achieving it. In 2015, mBank finalized its key technological undertaking, i.e. the migration of MultiBank clients to the mBank platform, with great success. It will allow better adjustment of our offer to the needs of clients and will lower the costs of servicing them. The Orange Finance project continued to be developed with very good results, similarly as our activities in the Czech Republic and Slovakia. The year 2015 proved that mBank’s change of name and brand was the right decision, was profitable for the company and contributed to the fact that the financial results and the general state of the Bank are in a very good condition. mBank became the synonym of youth and modernity, the icon of mobility and client-friendliness. Holding an account with it is very prestigious. The Bank achieved positive results in the Corporates and Financial Markets segment. The client base of corporate banking increased by 1,775 clients. The balance of deposits and credit receivables increased in this area by 17% and 6%, respectively. The most dynamic growth was reported with regard to cooperation with clients from the large company segment. In 2015, mBank acquired 396 thousand new clients in the Retail Banking segment, and the value of funds deposited by retail clients increased during 12 months by 17%. Further increase in card transactions is also worth mentioning. Their number increased year on year by 36%. Thanks to the above, the Bank maintains its 12% share in cashless transactions in Poland. We are still developing and streamlining our credit activity on the retail market, especially within the scope of consumer loans the balance of which increased by 12%. The Supervisory Board is happy to state that the high profitability of mBank S.A. Group is very stable. It is also confirmed when compared to 2014. Over the past three years this stability has not been disrupted, or even more so – it accompanied the breaking of profitability records. Taking into account the macroeconomic conditions in 2015, and specifically the decline in market interest rates, the Board appreciates the results generated by mBank. Taking all the above into consideration, the Supervisory Board makes a positive assessment of the standing of mBank S.A. in 2015. The Supervisory Board appreciates last year’s commitment and effort made by the Management Board and its employees aimed at increasing the long-term value of the Bank for the Shareholders.
In the case of risk-related issues, the Supervisory Board operates through the Risk Committee exercising ongoing control over particular risk types, especially credit (including concentration risk), market, operational, liquidity and business risk. The Committee issues recommendations on large exposures posing single-entity risk. Moreover, in the past year the Committee dealt with various important issues related to risk, including macroeconomic issues, the internal control system of the Bank, the real property market strategy and the portfolio of treasury securities. Furthermore, at the Bank there are several committees whose tasks are directly related to risk management at mBank Group. These are, in particular: The Credit Committee of mBank Group, the Data Quality Management Committee, the Capital Management Committee, and the Assets and Liabilities Committee. The Supervisory Board positively assesses the risk management system at mBank S.A. In the opinion of the Supervisory Board, the system covers all the risk types significant for the Bank and the Group. Assessment of the functioning of the Compliance area and Internal Audit at the Bank. The Audit Committee, operating within the Supervisory Board, monitors all the issues connected with internal control on an ongoing basis, and supervises and exercises functional control over the Internal Audit Department. In 2015, the Audit Committee of the Supervisory Board was regularly informed about a broad spectrum of audit-related issues, including assessment of internal control and risk management systems, the course of the major audits at the Bank and in the subsidiaries of the Group. The Committee also assessed and approved the Audit Plan for 2015. Moreover, the Chairman of the Supervisory Board was provided by the Internal Audit Department with reports on all the audits conducted at the Bank and in the subsidiaries of the Group. The Audit Committee of the Supervisory Board is also supported by an external auditor who in 2015 regularly reported on the results of and conclusions from the audit of financial statements. During the meetings of the Audit Committee, the Compliance Department submitted information on problems concerning the Compliance area, presented the Supervisory Board with all reports of the Department and changes in the Compliance Rules which required approval of a supervisory body. During the following meetings of the Audit Committee, the Compliance Department discussed the Whistle-blowing Reports (BKMS application used for anonymous fraud reporting in the bank). The Supervisory Board positively assesses the operation of the Internal Audit and Compliance area at mBank S.A. In the opinion of the Supervisory Board, the operation covers all the risk types significant for the Bank and the Group that are related to their activities. Maciej Leśny Chairman of the Supervisory Board
Management Board Report on the Performance of mBank S.A. Group in 2015
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
Table of content 1.
Short overview of mBank Group ............................................................................................. 4
1.1. 1.2. 1.3. 1.4. 1.5. 2.
2015 – key highlights of mBank Group .................................................................................. 15
2.1. 2.2. 2.3. 2.4. 2.5. 2.6. 3.
Key financial and business data of mBank Group .................................................................... 6 History of mBank Group ...................................................................................................... 8 mBank Group’s business model in a snapshot ......................................................................... 9 mBank Group’s strategic advantages ................................................................................... 10 Composition of mBank Group and main activities areas ......................................................... 12 2015 in numbers .............................................................................................................. 15 Summary of 2015 ............................................................................................................. 17 Key projects of mBank Group in 2015 ................................................................................. 17 Innovations at mBank Group .............................................................................................. 19 Strategic partnerships ....................................................................................................... 23 Awards and Distinctions .................................................................................................... 25
mBank Group Strategy and plans for the coming years ........................................................... 28
3.1. Implementation of mBank Group Strategy for 2012-2016 ...................................................... 28 3.2. Strategy for 2016 - 2020 ................................................................................................... 29 4.
Macroeconomic environment ............................................................................................... 30
4.1. Economy and the banking sector in 2015 ............................................................................. 30 4.2. Changes in recommendations of the Polish Financial Supervision Authority (KNF), legal acts concerning banks in Poland ...................................................................................................... 34 4.3. mBank Group and the Polish banking sector performance in 2015 ........................................... 40 4.4. Demographic profile of mBank Group clients ........................................................................ 41 4.5. Housing market ................................................................................................................ 41 5.
12.1. Risk management foundations and challenges of 2015 ....................................................... 102 12.2. Main risks of mBank Group’s business ............................................................................. 104 12.3. Capital adequacy .......................................................................................................... 120 13. 13.1. 13.2. 13.3. 13.4. 13.5.
HR development ............................................................................................................ 122 Changes in employment ................................................................................................ 122 Mission and values of mBank Group ................................................................................ 123 Training and development .............................................................................................. 124 mBank Group’s incentive system .................................................................................... 126 MbO (Management by Objectives) - planning and appraisal system ..................................... 133
14.
Investments ................................................................................................................. 133
15.
mBank and social corporate responsibility ......................................................................... 133
15.1. mBank Foundation ........................................................................................................ 133 15.2. Other social-oriented activities........................................................................................ 135 16.
Statement of mBank S.A. on application of Corporate Governance principles in 2015 ............. 136
16.1. Application of Corporate Governance Principles ................................................................. 136 16.2. Internal control and risk management systems with regard to the process of preparing financial statements of mBank ............................................................................................................ 139 16.3. Significant blocks of shares ............................................................................................ 140 16.4. Principles of appointing and dismissing Management Board Members ................................... 141 16.5. Amendments to the Company’s By-Laws .......................................................................... 142 16.6. General Meeting and shareholder rights ........................................................................... 142 16.7. Composition, powers and procedures of the Management Board and the Supervisory Board .... 145 17.
Glossary ....................................................................................................................... 160
18.
Statements of the Management Board .............................................................................. 163
Financial position of mBank Group in 2015 ............................................................................ 45
5.1. Profit and loss account of mBank Group ............................................................................... 45 5.2. Changes in the consolidated statement of financial position .................................................... 52 5.3. Prudential consolidation ..................................................................................................... 54 6.
mBank Group capital and funding ......................................................................................... 59
6.1. mBank Group capital base ................................................................................................. 59 6.2. mBank Group funding ....................................................................................................... 63 7.
mBank Group in the financial services market in 2015 ............................................................. 66
7.1. Market share of mBank Group segments .............................................................................. 66 7.2. mBank Group geographical presence ................................................................................... 68 7.3. Headquarters of mBank in Poland, the Czech Republic and Slovakia ........................................ 69 8.
Corporates and Financial Markets ......................................................................................... 70
8.1. Corporate and Investment Banking ..................................................................................... 70 8.2. Financial Markets .............................................................................................................. 76 9.
Retail Banking ................................................................................................................... 79
9.1. Retail Banking in Poland .................................................................................................... 80 9.2. Retail Banking in the Czech Republic and Slovakia ................................................................ 84 10.
Business activity of mBank Group subsidiaries ..................................................................... 90
10.1. Summary of financial results of mBank Group subsidiaries.................................................... 90 10.2. Business activity of selected subsidiaries ............................................................................ 90 11. 11.1. 11.2. 11.3. 11.4. 12.
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Information for investors .................................................................................................. 96 mBank shareholders and share prices on the WSE ............................................................... 96 Ratings of mBank and mBank Hipoteczny ........................................................................... 98 Ratings of Poland, mBank and Commerzbank – comparison ................................................ 100 Investor Relations at mBank .......................................................................................... 100 Risk management .......................................................................................................... 102
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
1.
§
Short overview of mBank Group
mBank Group is the fourth-largest financial institution in Poland as measured by total assets. It offers retail, corporate and investment banking as well as other financial services such as leasing, factoring, insurance, financing of commercial real property, brokerage operations, wealth management, corporate finance and advisory in the scope of capital markets. mBank is the only Polish bank, which successfully replicated its Polish business model on foreign markets - in 2007 it started its retail operations in the Czech Republic and Slovakia. 2015 turned out well for the economy, however, the GDP growth was only slightly higher than the 2014 figure, amounting to 3.6% year on year compared with 3.3% in 2014. The change in growth composition and positive developments on the labour market are the key factors contributing to robust macroeconomic environment in 2015. The growth was driven by consumption rather than investments; consumption was based mainly on domestic resources, which reduced growth in import, while growth in export came only slightly below the 2014 figure, which improved the GDP growth statistics owing to a positive contribution to net export growth. Continuing recovery of the Polish economy created favourable conditions for the improvement of borrowers’ financial position and lead to an increase of demand for loans and other banking services.
§ § §
High quality of capital base – capital ratios surpassing regulatory requirements: CET 1 ratio at 14.3%, Total Capital Ratio at 17.3%. Accelerating client acquisition – in 2015, 396 thousand individual and 1,775 corporate clients were acquired. Signing of a strategic agreement with AXA Group on distribution of insurance products through the channels of mBank and a simultaneous sale of BRE Ubezpieczenia. Strenghtening the position as mobile and transactional Bank with the completion of the migration of former Multibank and Private Banking clients onto New mBank platform and further cooperation with strategic partners.
However, a pressure exerted both by factors affecting the revenue of financial institutions and by unfavourable one-off events faced by the Polish banking sector has made 2015 more challenging than expected for Polish banks. Following interest rate cuts in October 2014, the Monetary Policy Council (RPP) decided to continue the easing and in March 2015 reduced the reference rate by another 50 basis points to the historically low level of 1.5%. Additional burdens such as contribution to the Bank Guarantee Fund (BFG) due to the bancrupcy of Spółdzielczy Bank Rzemiosła i Rolnictwa w Wołominie and contribution to the Borrower Support Fund, combined with the low interest rate environment, meaningfully reduced the banking sector's profitability. For mBank Group, despite a challenging market environment, 2015 was another good year followed by sound business growth across segments. As a result of growing income, the net profit grew compared to 2014. The Group completed a number of projects which made it better prepared for both market and regulatory challenges in the coming years. The key highlights of 2015 for mBank Group include:
§ § § §
Growth in the net profit of mBank Group by 1.1% compared to 2014 to PLN 1,301.2 million. Growth in revenues by 3.9% year on year, supported by historically highest core income and gains on the sales of BRE Ubezpieczenia TUiR and PZU shares. High-growth dynamics of revenues adversely impacted by the unforeseen one-off costs, such as normal and extra-ordinary contribution to the BFG and contribution to the Borrower Support Fund: cost to income ratio at 50.2%. Excluding abovementioned costs and gain from the sale of BRE Ubezpieczenia TUiR and PZU shares cost to income ratio stood at 49.3% as at the end of December 2015. Sound volume development:
§ §
§ § § 4
Increase in gross loans by 5.2% compared to the previous year, supported by active sales in Retail Banking segment as well as in Corporates and Investments. Excluding reverse repo/buy sell back transactions and the FX effect gross loans increased by 6.3% year on year. Considerable growth in clients’ deposits by 12.0% year on year, due to a growth in deposits of both individual and corporate clients.
Retail lending expansion reflected in record-high sale of mortgage and non-mortgage loans – PLN 4.5 billion and PLN 4.9 billion of new loans sold, respectively. As a result of rapid growth of deposits, record-breaking reduction of the loan to deposit ratio to 96.7%. Further improvement in the quality of assets, with a significantly lower cost of risk compared to 2014, at the level of 54 bps.
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
1.1. Key financial and business data of mBank Group
Business Data
2011
2012
2013
2014
YoY change
2015
Retail Banking 2011
2012
2013
2014
YoY change
2015
Key Financials (PLN thou.): Net interest income Net fee & commission income Total income Total costs (incl. A) Thereof: One-off regulatory costs* Loan loss provisions
3,893
4,134
4,368
4,551
4,947
8.7%
Total loans (PLN M)
38,689
37,704
38,308
41,560
46,259
11.3%
Total deposits (PLN M)
26,701
33,234
34,203
39,285
46,117
17.4%
14
15
16
18
20
11.1%
Total loans (PLN M)
27,890
28,405
29,475
32,841
33,447
1.8%
Total deposits (PLN M)
27,015
24,249
26,753
32,237
34,424
6.8%
2,148,602
2,279,597
2,225,811
2,490,658
2,511,373
0.8%
839,972
786,546
834,738
901,690
897,176
-0.5%
Corporate Banking
3,563,510
3,570,774
3,673,524
3,939,168
4,093,464
3.9%
No. of customers (thou.)
-1,722,913
-1,661,331
-1,678,043
-1,770,565
-2,054,246
16.0%
-
-
-
-
-193,793
-
-373,470
-444,635
-477,778
-515,903
-421,222
-18.4%
Profit before income tax
1,467,127
1,464,808
1,517,703
1,652,700
1,617,855
-2.1%
Net profit attributable to shareholders
1,134,972
1,197,321
1,206,375
1,286,668
1,301,246
1.1%
* Contribution to the Bank Guarantee Fund of PLN 141.7 million to cover the cost of payments to deposit holders of bankrupt Cooperative Bank in Wołomin and contribution for the Borrowers Support Fund of PLN 52.1 million # Since Q4/13 a modified methodology of NPL recognition in retail area has been applied (the NPL ratio is calculated in accordance to a more strict client perspective methodology). **Since the end of March 2014 capital ratios are calculated according to the rules based on the Basel III.
Balance Sheet (PLN thou.): Total assets
98,875,647
102,144,983
104,282,761
117,985,822
123,523,021
4.7%
Total liabilities
90,802,982
92,526,062
94,026,323
106,912,844
111,248,057
4.1%
8,072,665
9,618,921
10,256,438
11,072,978
12,274,964
10.9%
Cost/Income ratio
48.3%
46.5%
45.7%
44.9%
50.2%
-
ROE net
16.4%
14.6%
13.1%
13.1%
11.8%
-
NIM
2.5%
2.4%
2.2%
2.3%
2.1%
-
NPL ratio#
4.7%
5.2%
6.3%
6.4%
5.7%
-
66.2%
64.1%
47.8%
51.9%
58.9%
-
9.6%
13.0%
14.2%
12.2%
14.3%
-
15.0%
18.7%
19.4%
14.7%
17.3%
-
6,294
6,138
6,073
6,318
6,540
3.5%
168,411
168,556
168,696
168,840
168,956
0.1%
42,102,746
42,138,976
42,174,013
42,210,057
42,238,924
0.1%
1.3
1.4
2.1
1.9
1.1
-42.1%
Total equity
No. of customers (thou.)
Key Indicators:
Coverage ratio Core Tier 1 / CET 1** CAR / Total Capital Ratio** Employment (FTE, at the end of period) Investor & Shareholder Information: Share capital (PLN thou.) Number of shares P/BV
6
6
7
7
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
1.2. History of mBank Group
1.3. mBank Group’s business model in a snapshot
1986
1989
1991
Receipt of credit line facilities from the World Bank and International Finance Corporation; BRE Bank becomes a member of the international settlement system SWIFT
Historically, mBank developed its operations from corporate banking, which has always been its strength. Since its establishment in 1986 the Bank has served some of Poland’s largest companies involved in foreign trade on export markets. A longstanding experience in corporate banking services set the stage for the Bank’s further expansion into the small and medium-sized corporate client segment.
Start of BRE Bank Group: BRE Brokers, the Group’s first subsidiary is established
1992
Listing of BRE Bank on the Warsaw Stock Exchange
1994
Signing of a strategic partnership agreement with Commerzbank AG
1996
In 2000, mBank started its retail operations by launching a fully Internet-based bank in Poland. It was a pioneering project in the local market, based on the Internet, direct service through call centre, and later on mobile banking and also other new technology-based solutions. In 2001, mBank also launched a high street brick-and-mortar bank, offering a broad range of products and services targeted at affluent customers and micro-businesses seeking an access to high quality, personalised service at branches. mBank is the only Polish bank with a successful track record of rolling out its domestic business model into foreign markets. In 2007, mBank launched retail operations in the Czech Republic and Slovakia, focusing initially on transactional banking and deposit products and further expanding into mortgage and consumer loans as the bank has been able to establish and develop strong client relationships. The Bank also offers to its Czech and Slovak clients a convenient mobile application.
Poland’s first Private Banking offer is launched
1998
Merger with Polski Bank Rozwoju SA
2000
Establishment of mBank – the first Internet-only bank in Poland – completed in just one hundred days
2001
Launch of Multibank, the second retail arm of BRE Bank, targeting affluent customers
2004
8
Establishment of Bank Rozwoju Eksportu as a joint-stock company with aim to service the needs of Poland’s expanding export-oriented companies
As a result, the Bank’s client base has grown almost entirely organically, reaching 4,947 thousand retail clients and 19,562 corporate customers at the end of 2015.
Start of iBRE, a modern Internet banking system for companies
2007
Foreign expansion of retail operations, the first branches of mBank are set up in the Czech Republic and Slovakia
2010
Successful issue of new shares, in which the Bank raises nearly PLN 2 billion
2011
mBank’s mobile transactional platform for iOS and Android is launched
2012
„One Bank” Strategy for 2012-2016 is announced
2013
Rebranding – Group brands are replaced with the strongest name: mBank New mBank transactional platform is launched
2014
Launch of cooperation with Orange Launch of New mBank platform for clients in Czech Republic and Slovakia
2015
Launch of the long-term cooperation with AXA Group Migration of former Multibank and Private Banking to mBank transactional platfrom
mBank Group is the fourth largest measured by total assets financial institution in Poland, providing retail, corporate and investment banking as well as other financial services, including leasing, factoring, commercial real estate financing, brokerage, wealth management, corporate finance and capital markets advisory as well as distribution of insurance.
Over the past few years, mBank has strengthened its client-oriented approach and has been pursuing a stable, focused strategy as a modern and innovative transactional bank providing an integrated range of multiple products and services meeting the needs of its clients. In 2013, mBank launched a reinvented, modern, convenient, easily accessible and user-friendly Internet platform (New mBank) with more than 200 new features, which won global recognition for innovation in banking taking home many international awards. The bank has been also systematically expanding its mobile application to provide the customers with the ability to manage their finances wherever they are. mBank’s widely recognised operational excellence is based on its state-of-the-art user interface for online banking, next-generation mobile applications, video banking and P2P payments via Facebook and text messaging, and real-time, event-driven customer relationship management (CRM) based on client behaviour patterns. The whole product offer is centred around the current account with a broad spectrum of financial services accessible in just “one click”, as the aim is to be the most convenient transactional bank on the market. In the corporate and investment banking area, mBank’s offer for business clients include a range of fully integrated commercial banking products, services and solutions, with particular emphasis on the advanced transactional banking platform. This comprehensive product offering is complemented by investment banking services, such as ECM, DCM and M&A advisory services. mBank’s distribution concept combines the most technologically advanced solutions adapted for the Polish banking market as well as current and future operating environment. It has been primarily based on Internet and mobile-based tools, tailored separately to the needs of both retail and corporate clients, and a mid-sized physical distribution network, offering premium service quality, located throughout Poland. With its proven ability in achieving the communicated targets, mBank is well positioned to continue its successful business growth in selected client segments through exploiting attractive market opportunities. The IT platform architecture allows the Bank to develop and introduce new products, services and sales channels rapidly, efficiently and with a low operational risk. Thanks to such a flexible infrastructure, mBank is able to manage its business expansion strategy.
8
9
9
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
1.4. mBank Group’s strategic advantages
(New mBank) with more than 200 new features and improvements was launched. Implemented solutions have been delivering higher client acquisition and transactionality. A flexibility of the mBank’s platform to expand or roll-out new strategic ventures is an additional advantage (e.g. an offering for the customers of Orange Finanse). At the same time, the Bank has been continuously enhancing its mobile application, providing the customers with even more convenient way to manage their finances wherever they are.
Over the past years mBank Group developed a range of competitive strengths, which enable the organisation to take advantage of growth opportunities and successfully achieve its strategic objectives. The key factors are illustrated and described below:
A distribution mix that anticipates shifting client preferences Given its multi-channel approach, which has been designed to anticipate and follow the changing needs of clients, mBank’s current sales mix is already ahead of what is expected to be the pattern of distribution prevailing in the banking sector in the coming years. Internet, mobile, video and call centre channels are rapidly gaining importance as demonstrated by the sales levels of various banking products generated by these channels as compared to traditional branches. In particular, a half of current accounts and more than 2/3 of saving products are sold through mBank’s Internet platform. In addition, a dynamically growing number of banking activities has been performed through mBank’s mobile application, of which checking the balance of current account and making transfers are the most popular. Such a sales mix guarantees no need for painful structural adjustments in the near future. Moreover, as the Bank promotes a self-service model in which retail customers operate their accounts predominantly via remote channels, it gains an opportunity to proactively use modern real time marketing and cross-sell more products. Structural cost advantage Heavy investments in the Internet and mobile transaction platforms along with maintaining a light and efficient branch infrastructure result in a lower overall cost base and a high degree of operating flexibility for mBank. The Group’s competitive advantage stemming from its business model manifests itself in superior efficiency metrics compared to other Polish banks. Based on such ratios as cost to income, cost to average assets or gross loans to number of branches, mBank ranks among the top in all three categories when compared to the major Polish banks. mBank operates through the optimal number of branches, what implies no need to carry out a restructuring of its physical distribution network resulting in the branch closures. Inherent ability for organic growth mBank is the largest organically developed retail banking franchise in the CEE region. In contrast to most financial services groups in Poland, mBank has not grown through any significant mergers and acquisitions, proving its strong ability to constantly attract new customers in the three countries. The Group’s retail client base in Poland, the Czech Republic and Slovakia has grown solely organically by 322 thousand and 396 thousand in 2014 and 2015, respectively, reaching in total 4,947 thousand retail customers. Favourable demographics
Strategic balance sheet management
mBank’s unique value proposition in the retail banking segment, anchored in an attractive and forefront business model, has been developed to target young, aspiring and tech-savvy clients, who quickly adapt innovative solutions. Consequently, mBank’s customer base has an advantageous demographic profile as compared to the Polish market.
Due to its continued focus on diversified, long-term and attractively priced funding, mBank Group managed to improve its liquidity profile, as demonstrated by gradually declining loan to deposit ratio, which reached 96.7% at the end of 2015.
A half of the Bank’s retail clients are under the age of 35 and are expected to reach their highest personal income levels in the coming years, positioning mBank to reap the benefits from additional cross-selling opportunities of banking and insurance products. Maturing of the customer base provides a natural source for revenue growth as well as supports the asset quality of the Group and the responsiveness of its clients to cross-selling initiatives. More on the demographics of mBank Group customers in the chapter 4.4. Demographic profile of mBank Group clients. Modern, flexible, state-of-the-art banking platform Anticipating the development and increasing accessibility of the Internet, already since 2001, mBank has applied and promoted a modern and highly convenient retail banking model based on the Internet and other new technologically advanced solutions. As a result, the Bank is uniquely positioned in the market to offer a wide range of innovative products and services, meeting the changing needs of its target clients.
On the asset side, development of balance sheet benefits from the phasing out of the legacy CHFdenominated mortgage loan portfolio and the intended expansion of higher margin lending products, such as retail consumer loans (predominantly cross-selling of non-mortgage loans to existing current account customers), PLN-denominated mortgage loans and SME loans. On the liabilities side, mBank is focused on ensuring a stable and adequate deposit base by leveraging the higher sight deposit volume as a primary banking relationship for majority of its retail clients. Strengthening of balance sheet funding quality is also supported by issuances of senior unsecured and subordinated bonds in domestic and international markets. Moreover, mBank Hipoteczny maintains a leadership position on the Poland’s covered bond market, adding to the Group’s long-term financing sources. Issues of these instruments, performed both in EUR and PLN, not only help to cut the funding costs, but also better match the maturity of assets and liabilities as well as their currency structure.
mBank, as a global innovator in banking, has been constantly improving its Internet and mobile transaction systems. In 2013, a re-developed, modern, intuitive, easily accessible and user-friendly Internet platform
10
10
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
1.5. Composition of mBank Group and main activities areas
In Q3 2015, in connection with the cessation of the activity of MLV 45 Sp. z o.o. spółka komandytowa, mBank S.A. has conducted reorganisation within mBank S.A. Group, which involved the transfer of shares held by the company MLV 45 Sp. z o.o. spółka komandytowa in companies mBank Hipoteczny S.A., mLeasing Sp. z o.o., mFaktoring S.A. and mLocum S.A. under the direct control of mBank S.A. On September 10, 2015, shareholders of MLV 45 Sp. z o.o. spółka komandytowa - mBank S.A. and MLV 45 Sp. z o.o. adopted a resolution on MLV 45 Sp. z o.o. spółka komandytowa liquidation, opening a liquidation procedure and appointing a liquidator. The application for the opening of the liquidation procedure was submitted to the District Court for the Capital City of Warsaw, 12th Division of the National Court Register on September 10, 2015 and the company was deleted from the register on December 22, 2015. The aforementioned reorganisation steps have had no impact on the continuing full control mBank S.A. exercises over the mentioned subsidiaries. As a result the Group ceased to consolidate MLV 45 Sp. z o.o. Sp.k. in Q3 2015.
mBank Group is composed of: mBank S.A. – a parent company, and 12 subsidiaries, where mBank holds majority of shares. At 2015 mLeasing, mBank Hipoteczny, Dom Maklerski mBanku and mFaktoring were among most important subsidiaries at the Group. The composition of mBank Group as at the end of 2015 was as follows:
mBank S.A.
100% mBank Hipoteczny S.A.
100%
In Q3 2015, the company Tele-Tech Investment Sp. z o. o. was consolidated. The company's business includes investing funds in securities, trading in receivables, proprietary trading in securities, managing controlled enterprises, business and management consultancy. The company has no employees.
mLeasing Sp. z o.o.
In view of the above, at the end of 2015 the division of the operations of mBank Group into segments and business areas was the following: 100%
mFaktoring S.A.
100%
100%
Aspiro S.A.
Composition of mBank Group
Dom Maklerski mBanku S.A.
Corporates and Financial Markets
Segment
100%
mWealth Management S.A.
Retail Banking
100% mCentrum Operacji Sp. z o.o.
100%
Bank
§ BDH Development Sp. z o.o.
§ §
79.99%
Garbary Sp. z o.o.
100%
Tele-Tech Investment Sp. z o.o.
In 2015, the Group aimed for adjusting its business model with regard to the sale of non-life and life insurance products, focusing on a future strategic partnership with AXA Group, the best in class international insurance group. On March 30, 2015, mBank Group finalized the transaction concerning the sale of 100% of shares in BRE Ubezpieczenia TUiR to AXA Group. For more on the transaction with AXA Group, see chapter 2.5. Strategic partnerships.
12
Private Banking
§ § §
12
Corporations and non-banking financial institutions (capital groups) (K1) Large Companies (K2) SME (K3)
Maklerski mBanku § Dom S.A. (brokerage house)
Retail Consolidated subsidiaries
mFinance France S.A.
~100%
Affluent retail customers
Maklerski mBanku § Dom S.A. (brokerage house) -
100%
mLocum S.A.
Retail customers and microenterprises
Corporate and Investment Banking
- Corporate
Sp. z o.o. § mLeasing Retail
Sp. z o.o. – § mLeasing Corporate
mBank Hipoteczny S.A. § Retail
Hipoteczny S.A. § mBank - Corporate
§ Aspiro S.A. Management § mWealth S.A.
§ mFaktoring S.A. § Garbary Sp. z o.o. Investment § Tele-Tech Sp. z o. o.
Other subsidiaries
n n n
Financial Markets
§ § §
Banks Corporate clients in scope of trading and sales Market and Liquidity Risk Management
France S.A. § mFinance (special purpose entity reserved for financing activities of the Bank) Sp. z o.o. – § mLeasing within the scope related to fund raising Hipoteczny S.A. – § mBank within the scope related to fund raising
mLocum S.A. (a real estate developer) mCentrum Operacji Sp. z o.o. (outsourcing services provider) BDH Development Sp. z o.o. (a real estate management company)
13 13
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
Under IFRS, all of the above subsidiaries are consolidated by way of acquisition accounting. The business of selected subsidiaries is briefly described in chapter 10.2. Business activity of selected subsidiaries.
2.
Changes in authorities of mBank
2015 – key highlights of mBank Group
2.1. 2015 in numbers
Supervisory Board of mBank S.A. As of December 31, 2015, the Supervisory Board was composed of the following members: 1.
Maciej Leśny – Chairman of the Supervisory Board
2.
Martin Zielke – Deputy Chairman of the Supervisory Board
3.
Martin Blessing – Member of the Supervisory Board
4.
Andre Carls – Member of the Supervisory Board
5.
Stephan Engels – Member of the Supervisory Board
6.
Thorsten Kanzler – Member of the Supervisory Board
7.
Teresa Mokrysz – Member of the Supervisory Board
8.
Stefan Schmittmann – Member of the Supervisory Board
9.
Agnieszka Słomka-Gołębiowska – Member of the Supervisory Board
Revenues PLN
10. Waldemar Stawski – Member of the Supervisory Board
4,093
million
11. Wiesław Thor – Member of the Supervisory Board
RoE net
11.8%
12. Marek Wierzbowski - Member of the Supervisory Board. On November 24, 2015, Maciej Leśny, Chairman of the Bank's Supervisory Board, received a letter of resignation from Dr. Stefan Schmittmann, Member of the Bank's Supervisory Board and Chairman of the Risk Committee on resigning from the held functions as of December 31, 2015. Pursuant to a Resolution of the Supervisory Board of the Bank dated December 10, 2015, Dr. Marcus Chromik, replacing Stefan Schmittmann who resigned as of January 1, 2016, was appointed Member of the Supervisory Board of the Bank until the end of the term of office of the current Supervisory Board. He was also appointed Chairman of the Risk Committee of the Supervisory Board of mBank. Management Board of mBank S.A.
Increase in total loans excl. FX effect & reverse repo
6.3% YoY
Increase in total deposits
12.0% YoY
As of December 31, 2015, the Management Board was composed of the following members: 1.
Cezary Stypułkowski – President of the Management Board, Chief Executive Officer
2.
Lidia Jabłonowska-Luba – Deputy President of the Management Board, Chief Risk Officer
3.
Przemysław Gdański – Deputy President of the Management Board, Head of Corporate and Investment Banking
4.
Jörg Hessenmüller – Deputy President of the Management Board, Chief Financial Officer
5.
Hans-Dieter Kemler – Deputy President of the Management Board, Head of Financial Markets
6.
Cezary Kocik – Deputy President of the Management Board, Head of Retail Banking
7.
Jarosław Mastalerz – Deputy President of the Management Board, Chief Operations Officer.
No. of clients retail & corporate
No. of employees
5.0
6,540
No. of mobile application users
Market positioning
More than
#4
million
For more information on profiles of Members of the Supervisory Board and the Management Board of mBank, see chapter 16. Statement of mBank on application of Corporate Governance principles in 2015.
1 14
14
million
FTE
in terms of assets 15 15
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
Business lines – key data
2.2. Summary of 2015
with
relations with small § Intensified and medium-sized enterprises;
of mobile payments services § Launch BLIK and NFC
launch of mPlatforma Walutowa (mobile FX Platform)
of over PLN 800 million covered § Issue bonds by mBank Hipoteczny again among the top banks in § mBank Poland, according to the rankings of Forbes and Newsweek
§ §
Commencement of integration of Dom Maklerski mBanku and mWealth Management within the Group’s structure
Q2
§ Strategic alliance with AXA Group agreement signed § Distribution Allegro
Q4
Q3
Q1
Significant achievements
Launch of mBank Group new website
2016
Commencement of integration of selected subsidiaries within the Group’s structure Launch of mPlatforma Walutowa
2015 Distribution agreement with Allegro
Strategic Alliance with AXA Group
New mBank Group website
Covered bonds issue
Launch of BLIK and NFC
2.3. Key projects of mBank Group in 2015 Migration of Multibank clients to mBank On October 19, 2015 former Multibank and Private Banking clients gained access to mBank’s transactional system, finalising the process of business integration under one, common mBank brand. It was the most complex and complicated operation in the Bank’s history, taking into account the number of systems which were undergoing simultaneous changes. Migration included 630 thousand clients and consisted of data transfer between transactional systems. As a result, clients can now use over 200 new functionalities and improvements. At the same time all products and services held by former Multibank and Private Banking clients were transferred to the new mBank service. They also gained access to the mBank’s mobile application, while the old system and application have been switched off.
16
16
17 17
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
Commencement of integration of Dom Maklerski mBanku and mWealth Management within the Group’s structure
In 2015, 7 issues of mortgage bonds were carried out: Volume
Currency
Date of issue
Maturity
Tenor (in years)
200 M
PLN
20.02.2015
28.04.2022
7.2
WIBOR 6M + 78pb
20 M
EUR
25.02.2015
25.02.2022
7.0
Fixed (1.135%)
The division will ultimately result in integration of the brokerage operations of mBank, Dom Maklerski mBanku and mWealth Management in an expanded brokerage bureau of mBank. By bringing the brokerage operations under one roof, mBank Group will be able to offer an optimum portfolio of brokerage services to all its client groups, both individuals and institutions.
250 M
PLN
15.04.2015
16.10.2023
8.5
WIBOR 6M + 87pb
11 M
EUR
24.04.2015
24.04.2025
10.0
As a result, a one-stop shop will be created offering all clients tailor-made brokerage services matching their individual situation and investment objectives. The client base of mBank Group subsidiaries and its dynamic growth will support the increase in the Group’s brokerage services potential. Following the integration, mBank brokerage bureau will provide the clients with all the solutions available on the brokerage services market - ranging from simple execution of client instructions to investment advisory and portfolio management. All clients will be able to use cutting-edge transactional platforms offering tailormade features.
50 M
EUR
24.06.2015
24.06.2020
5.0
EURIBOR 3M + 69pb
500 M
PLN
17.09.2015
10.09.2020
5.0
WIBOR 3M + 110pb
255 M
PLN
02.12.2015
20.09.2021
5.8
WIBOR 3M + 115pb
In Q4 2015, the management boards of mBank and Dom Maklerski mBanku S.A. and mWealth Management S.A. signed the division plans marking the first stage of the planned integration of the companies within the Group’s structure. Brokerage services that so far have been rendered through Dom Maklerski mBanku and mBank will be carried out via single entity, i.e. mBank, with mWealth Management expected to join the process later on.
When implemented, the target model of rendering brokerage services will enable mBank Group to better use its resources and potential, giving it an even greater competitive advantage in the brokerage services market. One Network Project of mBank Under its Strategy adopted in 2012, mBank has been implementing the One Network Project to consolidate its sales network and further improve both retail and corporate customer service. In the cities included in the project, the separate retail and corporate branches are being replaced by advisory competence centres located in office buildings and the so-called “light” branches located in shopping malls. Light branches are to provide quick and effective service in the basic scope (sale and services regarding core products, i.e. bank accounts, payment cards issued on the spot or cash loans, including cash-desk service and accepting instructions). The idea of advisory centres is to offer thorough, often time-consuming service including a full range of products from retail, corporate and private banking area and products of selected mBank subsidiaries (e.g. mLeasing, mFaktoring and Dom Maklerski mBanku). In 2015, the decision was made to introduce this new sales model in the 10 largest cities in Poland. Changes will be implemented gradually until the end of 2020. Since the beginning of the project, by the end of 2015, 6 advisory centres and 9 "light" mBank outlets were opened, while in Gdynia and Kielce the transformation process was completed. In addition, mBank’s network is supported by around 90 mKiosks operated by Aspiro. Issue of covered bonds by mBank Hipoteczny mBank Hipoteczny (mBH) is one of three mortgage banks currently active on the Polish market (next to Pekao Bank Hipoteczny and PKO Bank Hipoteczny) and the leader in covered bond issues with a market share of 75.6% at the end of December 2015. Similarly to 2014, in 2015 mBank Hipoteczny became an even more active player on the debt securities market. mBH placed seven series of covered bonds during the year. The total nominal value of the covered bonds in issue exceeded PLN 1.5 billion. Consequently, mBH successfully achieved its target for 2015.
18
18
Coupon
Fixed (1,285%)
For more information on covered bond issues by mBank Hipoteczny, see chapter 6.2. mBank Group funding. Project ALM (Asset and Liability Management) At the beginning of 2015, the Bank launched the ALM Project. Its aim is to consolidate the systems of interest rate risk, market risk and liquidity risk, the funds transfer pricing system and the Bank's Treasury system into an integrated ALM System. As a result, the Bank will improve the quality and effectiveness of balance sheet and net interest income management processes. Through works on the implementation of the ALM System, the Bank strives to eliminate redundant systems and processes for collecting and processing data, systems, reporting processes and analytical tools which will translate in the improvement of the Bank's cost-efficiency. In 2015, the Bank completed the phase of development of a tool for thorough collection and processing of data for the needs of the target ALM System. The project has been implemented by interdisciplinary teams from the Risk, Finance, Treasury and IT areas of the Bank. 2.4. Innovations at mBank Group Mobile application Mobility-based technologies find application in a wide range of business models, while their capabilities are almost revolutionary compared with the time when mobility was still at a nascent stage. Today, it is difficult for many people to imagine life without a smartphone, which became an indispensable tool we use on a daily basis to make our lives easier. In the past, in order to pay a bill a client had to visit a bank’s branch. After the Internet revolution, such payments could be made without leaving the house. Today, all it takes to make a payment is a few seconds and clicks on a smartphone; clients no longer need to give the 26-digit account number and can make payments anytime and anywhere. This is the reason why freedom, speed, control, convenience and personalisation are what the users of mobile technologies appreciate the most. In line with the forecasts for the development of e-commerce market in Poland, in a few years’ time also the purchase of banking products using mobile technologies will surely become one of the core services offered by banks. According to a report by PR News, at the end of Q3 2015 the number of active users of mobile banking exceeded 5 million. mBank boasts the
19 19
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
greatest number of mobile users, which stood at 1,162,000 in Q3 2015.a The number of mBank’s clients that have already gone mobile is twice the Polish market average.b
Each year mBank is awarded numerous distinctions for the quality of services and products offered and wins contests against competitors from both Poland and abroad.
All mBank’s applications were downloaded 1,057,480 times, which represents a 44% increase compared with the previous year.
A small sample of what mBank Group managed to achieve with the support of its clients during its 27-year presence on the Polish market is presented below:
§
§
§ §
The share of client logins in the mobile channel rose by half: in December nearly one in three logins to mBank were from a mobile device. In 2015, the number of mobile channel users surged by almost 45% year on year. The clients’ activity in the mobile channel, as measured by the number of logins per one user, increased nearly by half in twelve months.
Over the last two years, mBank’s mobile application, launched in February 2014, won a large group of new users, and based on a survey of actual needs of the clients, was enriched with a number of new functionalities. Following an enthusiastic reception received by new functionalities such as balance check without login, quick cash loan, P2P transfers or mobile mOkazje and PUSH notifications, mBank decided to pursue further development. The key new elements of mBank’s application include:
§ § § § § § § § § §
New section “Deposits”, which makes the deposit offer available via mBank’s mobile application more attractive by offering products on special terms in the mobile tariff dedicated solely to those who downloaded the application. Now, the application users can use offers which so far had only been available via the Internet Banking channel, such as Offer for You or 3-day Deposit Mobile mTransfer, which allows clients to pay for their purchases on PayU/Allegro platform in only one click in mBank’s application Currency mPlatform, which allows clients to exchange currencies online in the application Multi-person Authorisation of Transactions, which allows for a "double-check" authorisation in the application. This functionality makes it possible to authorise transfers set up on another device BLIK service, which allows clients to quickly pay for their purchases, make ATM withdrawals and pay online via smartphones. For more information about BLIK functionality, please see the “BLIK Service” section Payment of invoices using the QR codes scanning functionality
Additional facilities, such as an option to repeat a transfer or answer to a transfer or quick supply of account number Change of authorisation limits on payment cards - the amount or number of limits can be changed monthly or daily mLine in a click, which allows clients to connect with mLine consultants directly from the application, without the need to dial the number manually or log in using one’s client number and telecode
2015 was also an important year for mBank’s website development, which underwent a major overhaul. The new website launched in November was designed in line with the RWD (Responsive Web Design) technology, which provides an optimal viewing and interaction experience across a wide range of devices used to browse it. For more information about mBank’s new website, please see “New website” section.
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Source: http://prnews.pl/raporty/raport-prnewspl-rynek-bankowosci-mobilnej-iii-kw-2015-6551613.html
b
According to Finalta Research 2015
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July 2015 - every year Forrester Research compiles a ranking of mobile applications designed by European banks (European Mobile Banking Functionality Benchmark). The 2015 edition covered thirteen banks. mBank’s mobile application ranked third, which should be perceived as a considerable distinction, taking into account the scale of the undertaking. September 2015 - at this year’s Great Gala of the Banking Industry organised by Newsweek and Forbes magazines, banks competed neck and neck and the rivalry was exceptionally fierce. mBank won as many as four awards and came second in the Mobile Banking category, just a few points shy of the leader.
For more information on awards granted to mBank Group, see chapter 2.6. Awards and distinctions. New website Since November 29, 2015, mBank's clients have been using a new website. Not only the website appearance has changed, but also its layout, graphics and functionalities. The website is based on the Responsive Web Design technology enabling it to adapt the website layout to the screen of a device displaying the content. The technology makes it easier to surf the internet using such devices as smartphones or tablets, reducing to the minimum the need to resize invisible fragments of text and scroll or pan the displayed image to see the entire website. Clients expect to be able to access quickly interesting content on a given website, regardless of the device they use to open it. Bearing this in mind, a number of improvements have been introduced, such as a new layout and a fast browser, which suggests a further part of a phrase entered by the user. The information is displayed in an organised manner, starting from the most up-to-date content. Additionally, once the user enters a phrase, for example "cash loan", not only are the offer details displayed but also a link to apply for a cash loan at once. Changes in the website are noticeable as well when the user starts browsing for outlets, ATMs and deposit machines. It is possible to filter an outlet to check not only its address, but also the scope of services.
NFC payments for Android system available to Orange subscribers
a
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February 2015 - prestigious Mobile Trends Awards were handed out for the fourth time to the best companies and institutions from the mobile technologies sector. The award committee named the winners in as many as seventeen categories, while three special prizes went to the authors of applications selected by Internet users. mBank won in the following categories: mobile banking and Mobile Trends Awards special prize.
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A new economic website was also launched. All the necessary data was collected in one place and presented in a clear form of graphs. Investors may save data on funds they find interesting in the "favourites" tab, keeping the information within reach whenever he wishes to review it again. The website designers also kept in mind the needs of blind users or those with poor eyesight. New websites were adjusted to the needs of this group of clients and designed in line with the Web Content Accessibility Guidelines. Last but not least, one of the most important elements implemented as part of the project is a new common login site for clients from all segments. Retail clients, corporate clients, Private Banking clients and SMEs may switch between their dedicated transactional systems from the level of one site, which is particularly important after the merger of mBank and Multibank. mBank StartUP Challenge "Cooperate with the bank and visit Tel Aviv!" In November 2015, young entrepreneurs were given an opportunity to participate in mBank StartUP Challenge competition organised in cooperation with Business Link Polska. The winners were invited to an acceleration programme in Tel Aviv and were given the possibility of entering into business cooperation with mBank.
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank's mission in the scope of servicing small and medium-sized enterprises (SME) goes far beyond the area of product service. mBank's aim is to create an "entrepreneur's ecosystem", i.e. an environment where a start-up will not only easily use products it needs but also receive support in the process of managing a business - starting from support in its establishment to advisory services regarding its further development.
BLIK Service
To accomplish this mission mBank StartUP Challenge - the acceleration programme - has been organised, which is a unique opportunity to develop a business and find international investors. For a business beginner, such a trip is a great opportunity which may be more helpful than money. Moreover, for the Bank it is an occasion to start cooperating with small entities developing products on the verge of innovation. In order to take part in the competition, candidates were to present how their products may prove helpful in cooperation with the Bank. The proposed activities should help to increase the number of users of the mobile application, encourage mBank's clients to save or invest or enable the Bank to carry out more effective credit risk assessment. The main criterion for the assessment of concepts presented by the participants was the innovativeness of a proposed solution and the possibilities of its application in business.
In February, mBank activated in its mobile application the functionality for paying at traditional and online shops and withdrawing cash from ATMs by means of BLIK service. Thanks to this functionality, it is possible to make a payment just using a smartphone with the Bank's mobile application. BLIK service was activated at the same time by 6 member banks - shareholders of Polski Standard Płatności which operates the BLIK system. The innovativeness of mBank's solution was awarded at the annual Polish Card Gala in the Best Cashless Product of 2015 category. For more information on awards granted to mBank Group, see chapter 2.6. Distinctions and awards. 2.5. Strategic partnerships Strategic cooperation with AXA Group In March 2015, the sale of BRE Ubezpieczenia Towarzystwo Ubezpieczeń i Reasekuracji (BRE Ubezpieczenia TUiR) was completed. On March 30, mBank Group and AXA Group signed agreements accompanying the sale and distribution agreements, governing long-term cooperation between mBank Group and AXA Group on the distribution of insurance products.
Additionally, the competition participants were asked to develop the grounds for a business model and use it to present their ideas for cooperation with mBank. Out of hundreds of applications, the competition organisers - the University Entrepreneurship Incubators Foundation and mBank - selected the best 5 proposals which were presented on December 15, 2015, during the competition gala, taking place at mBank's headquarters in Warsaw. The competition finalists were the following companies: KoalaMetrics - an entity analysing data in the area of mobile applications, FriendlyScore – an entity using social media data in credit scoring, zapobraniem.pl - a designer of innovative payment solutions in e-commerce area, iWisher - a designer of a platform combining e-commerce with clients' savings goals, and Oort - an entity operating in the area of Internet of Things and SmartHome solutions.
The total consideration of mBank Group from the sale of shares in its insurance subsidiary and from the distribution agreements signed with AXA Group members amounted to PLN 579.5 million, while the one-off impact of the transaction on the pre-tax income of mBank Group recognised in Q1 2015 amounted to PLN 194.3 million. As part of the transaction there were signed several agreements to govern the long-term cooperation between the Bank and AXA Group companies concerning distribution of life and non-life insurance products. The term of the distribution agreements will be no less than 10 years.
During the gala, each finalist had three minutes for a pitch talk to briefly present its concept. The winner - KoalaMetrics was awarded with participation in the acceleration programme in Tel Aviv which offers but is not limited to workshops and coaching and mentoring sessions with the aim to develop and refine its business model, as well as meetings with potential investors.
AXA: insurance products
mBank Group: distribution channels
NFC service in Orange Finanse The rapidly increasing importance of mobile payments is in line with one of the most substantial trends nowadays - smartphones taking over new areas of our life. It seems that within the coming months, contactless mobile payments will become a common payment method in Poland. Today, over 60% of Polish consumers are interested in paying at shops using their smartphones, and two thirds expect that in 5 years we will pay by phone at least once a week, according to the Mobile Money 2020 survey carried out by Visa Europe.
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Contactless payments with the use of a smartphone are becoming a part of our reality, thanks to an increasing popularity of NFC technology, which makes it possible to use a smartphone as a digital wallet. Following this trend, in February 2015, Orange Finanse expanded its offer with NFC contactless payments dedicated to Android systems. The process is fully integrated with Orange Finanse mobile application. All the steps such as applying for an NFC card, its activation, card payments or cancellation are carried out from the level of the mobile application; there is no need to install more applications on a smartphone.
Life insurance Property insurance
§ § §
Internet platform Mobile devices Brick-and-mortar branches
The cooperation with AXA Group is being reflected in the expansion of the product mix and improvement in the quality of services for mBank Group’s clients, who have access to the most innovative insurance products offered via both electronic and mobile platforms, as well as traditional branches. For the Bank, the strategic alliance with AXA is yet another step towards the full utilization of the potential of the mBank’s Internet and mobile platforms. In July mBank and AXA Group launched their first joint advertising campaign, which aims at presenting how the cooperation of two experienced business partners translates into convenience and security of clients buying insurance policies.
From the client's perspective, handling NFC cards is extremely easy; all that he needs to do is instal Orange Finanse mobile application, apply for the card in the application and activate the card through the assignment of PIN. Then, he may pay with the card at shops and other service outlets. It takes less than 10 minutes to instal an NFC card in the mobile application. The simplicity of installation is crucial - the client is only 7 clicks and 2 screens away from getting the card. For more information on cooperation with Orange, see chapter 2.5. Strategic partnerships.
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
Strategic partnership with Orange
mBank’s cooperation with Allegro
The joint-venture of mBank and Orange, Poland’s leading landline telephone, mobile, Internet and data transfer provider, called Orange Finanse, was launched on October 2, 2014.
In Q1 2015, mBank signed a long-term agreement on strategic cooperation with Poland’s on-line auction market leader, Allegro. The cooperation will consist in offering banking products to Allegro users. Since the beginning of cooperation the volume of sales via Allegro amounted to PLN 60.2 million, while the number of clients stood at 29.2 thousand as at December 2015.
Thanks to its innovative offer, after only a year upon its launch, Orange Finanse became mBank’s key acquisition channel. By the end of 2015, more than 250,000 accounts were opened with Orange Finanse, including almost 210,000 in 2015 alone. H1 2015 was marked by new implementations and changes in the offer of Orange Finanse, whose clients are currently offered personal accounts, loans (Express Cash Loan, Renewable Loan), debit cards, credit cards, NFC payments by mobile phones, savings accounts, 3, 6 and 12-month deposits, discount programmes covering approx. 3 thousand partner outlets (stores, service providers, hotels, restaurants) and additional benefits available to the clients of Orange mobile network. For more information on NFC payments method, see chapter 2.4. Innovations at mBank Group. H2 2015 was a period of mobile finance development with a number of improvements being introduced, such as adding Windows Phone to the list of operating systems compatible with the mobile application of Orange Finanse or enabling the payment of invoices using QR codes, which takes only seconds to complete and requires no transfer data to be entered manually, and starting the sale of cash loans in Orange stores. It was also a period when a new joint offer for Orange clients was presented, promoting active users of Orange Finanse, who can have their monthly phone bills reduced by PLN 25. In 2015, specific initiatives were launched and enhanced products were offered to micro-enterprises as part of the offer of Orange Finanse, such as Account for Companies with an option to receive a limit of up to PLN 10 thousand, debit cards, savings account and Auxiliary Accounts.
Banking products and services
Banking licence ü Advanced mobile and Internet platforms ü Know-how and banking expertise ü
innovative products
The cooperation with Allegro, the largest on-line auction service in Poland, will provide mBank with access to an additional group of clients - 13 million users concluding about 160 million transactions per year. 2.6. Awards and Distinctions Following table presents selected awards received by mBank Group in 2015: Product offer and quality of customer service
The Global Finance magazine named mBank the best bank in Poland and ranked it among “World’s Best Corporate/Institutional Digital Banks”. mPlatforma Walutowa (FX mPlatform) was named the best transaction platform for currency exchange dedicated to corporate banking clients in the CEE region (Best Online Treasury Services in CEE). In an international contest organised by Efma (organization formed by bankers and insurers, which specialises in financial marketing and distribution) and Accenture for the most innovative banking projects, mBank was once again among the best banks in the world with: - marketing banking platform (a tool enabling management of multichannel direct marketing campaigns leading to their better personalization and automation and integrating all the data about the clients) the best in the "Digital Marketing" category - 3rd place in „Global Innovator” category Additionally, Orange Finanse climbed the podium having won second place in the category ”Best new product or service”
Marketing and sales
Established brand ü Large and attractive client base ü Wide distribution network ü
In the 6th edition of the Golden Banker ranking organised by Bankier.pl, a financial portal, and PayU, leader of Internet payments in Poland, mBank triumphed for the fifth time, winning awards for the best mobile banking, the best personal account and account for entrepreneurs and winning therefore a major award - the Golden Bank statuette.
one simple offer
In October 2015, Orange Finanse brand was ranked among the top global players participating in the contest for the best banking projects organised by Efma and came second in the Best New Product and Service category. Efma is an organisation associating more than 3.3 thousand financial institutions from over 130 countries, including 80% of Europe’s largest retail financial institutions. The purpose of the competition is to award the most interesting and innovative projects of financial institutions worldwide, addressed to retail clients. In 2015, 211 financial institutions from 59 countries entered the competition with 500 innovations. For more information on awards won by mBank Group, see chapter 2.6. Awards and distinctions.
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mBank products, primarily current accounts or cash loans, are offered to individuals across different parts of the service in the form of banners with contextual ads, mailings and newsletters allowing for an enhance of the cross-sell of loans.
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mBank was once again among the winners and received the Service Quality Star award in the "Banks" category in the Service Quality programme. Brands with the highest Customer Satisfaction Index (CSI) that stand out against their competitors were selected on the basis of assessments and opinions of consumers published on the website: jakoscobslugi.pl.
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
Brokerage activities
In the 4th edition of the “Quality you can bank on” ranking organised by TNS Polska in cooperation with Dziennik Gazeta Prawna daily mBank came second in terms of the quality of services offered in its branches. As part of this year’s edition, the auditors of TNS Polska visited branches of 19 banks offering personal accounts.
mBank’s team of brokerage analysts (mDM) was unrivalled in 2015 in forecasting the key macroeconomic and market indicators among participants of the forecasting contest organised by Parkiet daily. Based on the opinions of investors who evaluate the research departments of brokerage houses, mDM was ranked first.
Experts of the consultancy and research institution Celent Research, appreciated mBank's insurance sales model. For the second consecutive time mBank was among the winners of the international Model Bank Awards competition. mBank won in the "Innovation and Emerging Technologies” category.
Dom Maklerski mBanku won the title of the best broker/investment bank in Central and Eastern Europe in the first edition of the Annual CEE Capital Markets Awards. Moreover, mBank came second in a ranking of “Parkiet” compiled based on readers’ votes on 16 largest investments companies maintaining at least 10 thousand investment accounts.
At this year’s Banking Gala organised by Newsweek and Forbes magazines, mBank was recognized with the largest number of awards among all financial institutions listed in the ranking. In the 14th edition of the “Newsweek’s Friendly Bank” contest mBank was ranked: - second in the "On-line Banks" category - second in the “Mobile Banking" category - third in the “Bank for Kowalski” category - in which the quality of service is assessed along with the engagement of advisors in acquiring and retaining clients.
Other awards
mBank won the prestigious „The Best of the Best” award for the best 2014 annual report, in „The Best Annual Report” contest for listed companies organised by the Tax and Accounting Institute.
For the seventh time Private Banking of mBank was ranked the best in Poland by Euromoney Magazine, a British financial magazine. Every year, Euromoney Magazine conducts a survey among financial institutions offering specialist banking services to affluent clients. In Poland, mWealth Management has been the winner of this ranking every year since 2007.
mBank triumphed in the innovation category of the first edition of the Banking Stars competition organised by Dziennik Gazeta Prawna and PwC. mBank entered three projects in the competition: mobile banking, “light” branches located in shopping malls and cash loan available on line with credit decision in 30 seconds.
Marketing activities and mBank’s loyalty programme The design of the mBank Internet marketing platform was recognised as the most innovative technology supporting business development. It won the Financial Cool Business Award competition, which is part of an industrial event Gartner Symposium ITxpo 2015 in Barcelona. The mobile banking application was also ranked high and made it to the finals in its category.
For the second time in a row mBank won the title of the most innovative bank in the Leaders of Banking & Insurance World competition. The jury appreciated the changes introduced in the area of mobile banking and the new, redesigned application offering solutions such as the 30-second loan, i.e. the fastest loan on the market, or mOkazje discount programme with the possibility of geolocation of available offers, made banking simpler and more attuned to the clients’ lifestyles.
mBank’s loyalty programme mOkazje won in the category “The best loyalty activities in services” in the first edition of the Loyalty Awards, a contest of the best loyalty programmes in Poland in 2014.
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mBank Hipoteczny and mBank climbed the podium having won second and third place respectively in the ranking of banks financing real estate developers organised by the Polish Union of Developers.
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
3.
From the point of view of financial goals, the Bank implemented the vast majority of its strategic assumptions. Confronted with the deteriorating banking environment exercising pressure on net income, as well as entailing higher fees and commissions in respect of costs, the C/I ratio increased from 44.9% in 2014 to 50.2% in 2015. Excluding one-off costs, such as payment of guaranteed funds to the deposit holders of SK Bank in Wołomin and payment related to contribution to the Borrowers Support Fundand, together with the gain from the sale of BRE Ubezpieczenia TUiR and PZU shares, the cost to income ratio as at the end of 2015 stood at 49.3%.
mBank Group Strategy and plans for the coming years
3.1. Implementation of mBank Group Strategy for 2012-2016 The underlying principles of the Bank’s “One Bank” strategy, which was adopted in July 2012, are to improve the long-term profits and income generating capacity of the Group supported by a sound balance sheet and by providing clients with a high level of technological support. The Bank has undertaken a number of initiatives in line with this strategy, including the following:
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The Bank has improved its balance sheet structure. In particular, it has reduced its loan to deposit ratio and diversified its funding, including through its EMTN programme and through the launch of a programme to finance retail mortgage loans by the issue of covered bonds. The Bank has provided all its customers in Poland, the Czech Republic and Slovakia with state-of-theart, award-winning, innovative Internet banking platform. The Bank also offers its clients a best in class mobile application, and has positioned itself as the leader of mobile banking in Poland in terms of number of active users, and the "Mobility icon" in the context of the marketing communication. For more information on banking platform and mobile application, see chapter 2.2. Innovations at mBank. The Bank has completed the migration of former Multibank clients to mBank transactional platform. As a result, the Bank is able to get a better insight into its clients requirements and to offer improved products. The Bank also believes that by unifying its retail client platform, the Bank will be able to increase efficiency and provide more dedicated marketing communications. The Bank has enhanced its position in transactional banking. The number and value of card transactions for retail clients increased dynamically between 2012 and 2015, and mBank’s market share currently totals 12%. The Bank has also maintained a strong position in corporate transactional banking. The Bank has implemented a new organisational structure for Corporate and Investment Banking which is integrated with K2 client requirements (K2 segment covers corporates with an annual turnover from PLN 30 million to PLN 500 million and medium enterprises of the public sector). This is an important aspect of mBank’s long-term focus on deepening relationships with corporate clients, in particular K2 clients, by offering a full range of corporate finance solutions within an integrated institution. The Bank has also strengthened its position in arranging debt and equity issues, as well as on the M&A market. In the area of the retail banking, the Bank has enhanced the development of its relationship with small and medium-sized enterprises (SME) by an integration of competences related to SME services, including sales management and business development using mBank's strengths, i.e. Internet banking, mobility, fast banking processes. In addition, the Bank is focusing on acquiring clients within the K3 client segment. The K3 client segment covers small and medium sized enterprises with an annual turnover up to PLN 30 million.
The table below presents financial objectives set under Strategy for 2012-2016: Strategy for 2012-2016 Financial objectives
Target values
As at the end of 2015
approx. 115% by 2016
96.7%
min. 110%
109%
approx. 11%
14.3%*
Cost-to-income (C/I) ratio
max. 48%
50.2%
Gross ROE
min. 15%
14.7%
Net ROA
min. 1.4%
1.0%
Loan-to-deposit ratio Net Stable Funding Ratio (NFSR) Core Tier 1 ratio
* Common equity Tier 1 Capital ratio calculated in line with Basel III rules.
3.2. Strategy for 2016 - 2020 mBank is working on a Group's strategy for the years 2016 – 2020. The new strategy will address the most challenging factors faced by mBank. mBank's actions, as specified in the new strategy, will focus mainly on clients. The success on the banking market in the coming years will depend on the "client-centricity" skill - on the ability to identify and foresee client’s needs, and the introduction of simple and user-friendly solutions. In the context of changing behavioural patterns of clients and their expectations and preferences concerning cooperation with the Bank, mBank aspires to understand clients better, skilfully identify and precisely address their needs. The adoption of the new strategy is scheduled for H1 2016.
The Bank has increased revenues generated by mBank's foreign branches in the Czech Republic and Slovakia through the dynamic development of the clients' base and focusing on the sale of high-margin products. The Bank has standardised its brand policy by offering services to all of mBank's Group clients under the mBank's brand. The Bank continues to reorganise its network of retail and corporate outlets by focusing on technology and clients' expectations arising from technological trends and developments. In particular, the Bank is seeking to standardise its sales network, integrate its products and services and enhance its retail and corporate customer service. In the largest Polish cities, the separate retail and corporate branches are being replaced by advisory competence centres (in office buildings) and the so-called “light” branches located in shopping malls. For more information on network of retail branches, see chapter 2.1. Key projects of mBank in 2015. Commenced the re-design of the Group’s approach to the cooperation with the most affluent clients the process of integration of services for the clients of private banking, wealth management, and brokerage services (Dom Maklerski mBanku) under the umbrella of mBank is underway.
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
4,5 4,4 4,3 4,2 4,1 4,0 3,9 3,8 3,7
EUR/PLN
USD/PLN
Dec.15
Nov.15
Oct.15
Sep.15
Aug.15
Jul.15
Jun.15
May.15
Apr.15
Mar.15
Feb.15
3,5
Jan.15
3,6
CHF/PLN
The yields on 10-year T-bonds hit their lowest level on January 29 (1.939) only to lose value by June, reaching 3.40% (maximum reported on June 16). Although a part of the decline was compensated for over the following months (2.94% at the end of 2015), the performance of the debt instruments with long maturities became more variable and prone to global factors and sell-offs (these factors include a rise in the Fed’s interest rates, fears surrounding China); Polish bonds displayed greater correlation with emerging market countries, whose economies are structured differently than the Polish economy (Russia, Republic of South Africa, Turkey), which could be a sign that foreign investors place Polish debt in one basket with that of emerging market countries. At the same time, 5-year bonds performed similarly. The difference was particularly visible in the case of 2-year bonds whose yields, supported by the expected easing of the monetary policy, continued their downward trend. Apart from Fed’s interest rates hike and the negative surprise from the European Central Bank, the sell-off in December, just like in the case of 5-year bonds, was also caused by the plans (ultimately not realised) to impose tax on T-bonds being a component of banks’ assets, which previously were fairly popular among banks as a security for credit portfolios and a liquidity management tool. What will 2016 be like for the Polish economy? In 2016, the GDP growth rate is expected to stabilise around ca. 3.5%. The structure of growth will still be based on consumption and export, while investments will recede into the background; however in the case of investments 2016 is expected to be a transition period. Poland, being a country with high value added in export (which means that a major part of export is generated in Poland) takes full advantage of the weakening foreign exchange rate. Supported by strong labour market (which is close to becoming an employee’s market, continuation of processes started in 2015) and the expected launch of the government’s 500+ programme, consumption may grow by nearly 4% annually. In 2016, public investments will be curbed (in fact, only road construction expenditures will be rising; traditionally, the period between EU perspectives entails railways’ problems with using funds, suspension of investment plans in the energy industry and restrictions at the local government level). The beginning of the year will also be unfavourable to private investments due to political uncertainty (as shown by a study of the National Bank of Poland). However, if the economy remains on an upward trajectory, it will help to resume private investment programmes in the face of extensive use of production capacity. Poland will face the deflation until autumn when a considerable rise in prices is expected (helped by: statistical base effect, slow growth in prices of food and raw materials, pressure on prices of services connected with pay rises, tax on supermarkets). Since RPP takes an opportunistic view on interest rate
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
4,5
cuts, there is little chance of any reductions at the beginning of the year, which means that a decrease in the exchange rate volatility should rather be expected.
4,4
Złoty and Polish bonds
4,3
Polish assets have started to show more features typical of emerging markets. Over the next few months it will remain unknown whether we will be facing an escalation of internal risks or rather a normalisation; however, the economic parameters such as current account surplus, GDP growth, low USD debt, and inflow of EU funds suggest that the złoty is presently undervalued. In addition, the złoty should benefit from a more expansive policy of the main central banks. However, the room for appreciation of the zloty is smaller than the fundamental models would suggest. In Q1, the deflationary pressure will continue.
4,2 4,1 4,0 3,9
Compared with the previous years, there are fewer arguments in favour of a convergence between Polish long-term interest rates and European rates. The pursued strategy of lowering dependence on foreign investors (which involves greater use of domestic capital, including banks’ capital, to finance the budget deficit) is expected to reduce the steepness of the yield curve (up to 5 years) in the coming months. Consequently, in the next few months the yields on Polish bonds may even go down. In the following months, the trend on the base markets may become less favourable for bonds. At this point, we would like to point out the historically strong correlation between bond yields and inflation. The latter will pick up in H2 2016.
3,8 3,7
EUR/PLN
USD/PLN
Dec.15
Nov.15
Oct.15
Sep.15
Aug.15
Jul.15
Jun.15
May.15
Apr.15
Mar.15
Feb.15
3,5
Jan.15
3,6
Banking sector and monetary aggregates
CHF/PLN
The yields on 10-year T-bonds hit their lowest level on January 29 (1.939) only to lose value by June, reaching 3.40% (maximum reported on June 16). Although a part of the decline was compensated for over the following months (2.94% at the end of 2015), the performance of the debt instruments with long maturities became more variable and prone to global factors and sell-offs (these factors include a rise in the Fed’s interest rates, fears surrounding China); Polish bonds displayed greater correlation with emerging market countries, whose economies are structured differently than the Polish economy (Russia, Republic of South Africa, Turkey), which could be a sign that foreign investors place Polish debt in one basket with that of emerging market countries. At the same time, 5-year bonds performed similarly. The difference was particularly visible in the case of 2-year bonds whose yields, supported by the expected easing of the monetary policy, continued their downward trend. Apart from Fed’s interest rates hike and the negative surprise from the European Central Bank, the sell-off in December, just like in the case of 5-year bonds, was also caused by the plans (ultimately not realised) to impose tax on T-bonds being a component of banks’ assets, which previously were fairly popular among banks as a security for credit portfolios and a liquidity management tool.
As a result of increasing interest rates (loan margins had been rising even before the introduction of the banking tax), stricter requirements concerning the LtV ratio and relatively low attractiveness of mortgage loans caused by additional burdens imposed on banks, the growth in mortgage loans will slow down. This will be offset by faster growth in consumer loans (driven, among others, by the positive impact of the government’s 500+ programme on creditworthiness) as well as the dynamic growth in corporate loans where the banking tax should initiate limited restructuring and consolidation. Although a significant decline in interest on deposits may be expected (another effect of the banking tax and the restructuring of balance sheet size), it should not have a major impact on the growth in household deposits. At present, investment alternatives are unattractive, while higher nominal income (driven by both higher salaries and social benefits) translate into more deposits in the banking sector.
What will 2016 be like for the Polish economy? In 2016, the GDP growth rate is expected to stabilise around ca. 3.5%. The structure of growth will still be based on consumption and export, while investments will recede into the background; however in the case of investments 2016 is expected to be a transition period. Poland, being a country with high value added in export (which means that a major part of export is generated in Poland) takes full advantage of the weakening foreign exchange rate. Supported by strong labour market (which is close to becoming an employee’s market, continuation of processes started in 2015) and the expected launch of the government’s 500+ programme, consumption may grow by nearly 4% annually. In 2016, public investments will be curbed (in fact, only road construction expenditures will be rising; traditionally, the period between EU perspectives entails railways’ problems with using funds, suspension of investment plans in the energy industry and restrictions at the local government level). The beginning of the year will also be unfavourable to private investments due to political uncertainty (as shown by a study of the National Bank of Poland). However, if the economy remains on an upward trajectory, it will help to resume private investment programmes in the face of extensive use of production capacity. Poland will face the deflation until autumn when a considerable rise in prices is expected (helped by: statistical base effect, slow growth in prices of food and raw materials, pressure on prices of services connected with pay rises, tax on supermarkets). Since RPP takes an opportunistic view on interest rate
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
Act on Foreign Account Compliance Act (FATCA) agreement
34
01.01.2014 ->2019
Banking Recovery and Resolution Directive (BRRD)
The directive introduces framework for managing recovery and resolution of banks. It imposes the need to prepare respective plans (recovery – by banks, resolution – by resolution authority, in Poland – BFG) and establishes a resolution fund to provide for assistance in managing bank’s failure. It also constitutes minimum requirement for own funds and eligible liabilities allowing for effective bail-in of sufficient amount of liabilities and avoiding contagion or a bank run (MREL, binding since beginning of 2016, but delay in implementation on both European and domestic level is observed).
01.12.2015
Basel III (CRD IV/CRR regulatory package)
Defines requirements concerning, among others, capital base, liquidity, leverage ratio, corporate governance and remuneration policy. Transposition of provisions into Polish legislation has been carried out mainly by Act on macroprudential supervision, amending the Banking Law, but accompanying standards and documents are systematically being issued.
01.01.2015
2015
The adopted Act constitutes a legal framework for implementing FATCA provisions, obliging Polish banks to identify, collect, process and transmit information about US citizens and residents’ accounts to America’s Tax Office. An automatic information exchange will be performed on the basis of reciprocity.
YES – the regulation has an impact on a given area NO – the regulation has no impact on a given area, or has a limited impact on a given area
§ Capital Base § IT & HR resources § Financial result (without IT/HR costs)
YES NO
YES
§ Capital Base
YES
§ IT & HR resources
NO
(without IT/HR costs)
§ Client & Offer
§ Capital Base § IT & HR resources § Financial result (without IT/HR costs)
§ Client & Offer
Recommendation P
YES
§ Client & Offer
§ Financial result
Recommendation P issued by KNF aims at updating the standards of liquidity risk management in line with market practice (and EBA guidelines). It provides for defining the acceptable liquidity risk, liquidity measurement and management, especially versus other types of risk, intraday liquidity measurement, stress-testing and disclosures. Additionally, it contains requirements towards liquidity cost allocation within a fund transfer pricing system.
§ Capital Base § IT & HR resources § Financial result (without IT/HR costs)
Banking Law and other Acts
YES
An amendment to banking law and other acts concerns mainly liquidation of banking enforcement title, which served debt collection process, and regulating procedure of managing accounts of deceased and their takeover by the heirs.
YES NO NO
§ Client & Offer
NO
§ Capital Base
NO
§ IT & HR resources § Financial result (without IT/HR costs)
§ Client & Offer
§ Capital Base
27.11.2015
Date of entry into force and a summary of new challenges
§ IT & HR resources § Financial result (without IT/HR costs)
YES NO NO
NO NO NO
§ Client & Offer
YES
§ Capital Base
NO
NO
Recommendation on Internet payments security
NO YES
December 2015
A legal act / Recommendation
Influence on the main areas of the Bank
Act on macroprudential supervision over the financial system and crisis management
Q4 2015/01.01.2016
Changes in recommendations of the Polish Financial Supervision Authority (KNF) and legal acts concerning banks in Poland are presented in the table below:
The Act introduces additional capital buffers described in CRD IV to Polish legal framework. It implements also provisions concerning corporate governance, disclosure framework and crisis management principles, establishing the BFG as a resolution authority in Poland equipped with the resolution tools (BRRD partial implementation). The Act influences dividend policy of the banks by setting maximum distributable amount of dividend depending on the joint buffer requirement fulfilment.
31.12.2015
4.2. Changes in recommendations of the Polish Financial Supervision Authority (KNF), legal acts concerning banks in Poland
KNF Recommendation aims at setting uniform minimum requirements concerning security of payment transactions performed via Internet. Its provisions address i.e. process management, control and risk assessment as well as education of customers with this respect.
§ IT & HR resources § Financial result (without IT/HR costs)
§ Client & Offer
YES NO YES
NO YES
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35 35
(without IT/HR costs)
§ Client & Offer
YES
Recommendation W
YES
Act on assistance to borrowers in difficult financial situation
36
2016/prolongation of some provisions/
2016
Act on Bank Guarantee Fund, the deposit guarantee scheme and resolution
19.02.2016
European Market Infrastructure Regulation (EMIR)
Recommendation Z § Capital Base
NO
§ IT & HR resources § Financial result
YES
(without IT/HR costs)
§ Client & Offer
An amendment to an Act is going to implement the EU Directives: on Deposit Guarantee Scheme (DGS) and the BRRD (in respect to recovery plans, MREL, BRR fund). Main differences compared to these documents concern increased target levels for DGS fund (2.8% instead of 0.8%) and Resolution fund (1.4% instead of 1.0%). Collection period for the target volume of funds is set at 2024. Banks’ contributions are going to depend on their market share in the respective calculation and the risk profile of an institution. Under the currently binding regime, the annual contribution rate for 2015 (to be paid in 2016) was set at the level of 0.167% of total risk exposure amount (TREA) (0.189% in 2014) and prudential fee rate at 0.079% of TREA (0.05% in 2014). The Act aims at providing financial support to indebted individuals, fulfilling certain requirements who ran into financial difficulties and are not able to repay mortgage on their own. Financial help will be provided from the ‘assistance fund’, financed by the banks (initial value of PLN 600 million) proportionally to volumes of their portfolios of mortgage loans to households, for which the delay in repayment exceeds 90 days.
§ Capital Base § IT & HR resources § Financial result (without IT/HR costs)
§ Client & Offer
§ Capital Base § IT & HR resources § Financial result (without IT/HR costs)
§ Client & Offer
Recommendation W, on model risk management was issued by the KNF in July, 2015. It aims at setting the standards of the model risk management process as well as framework for building models and assessing their quality with the aim to ensure appropriate corporate governance.
§ Capital Base § IT & HR resources § Financial result (without IT/HR costs)
The draft of Recommendation Z on corporate Governance was submitted to public consultation by the KNF on December 23, 2015. It covers the elements of corporate governance resulting from other regulations, such as Banking Law (implementing majority of CRD IV provisions of corporate governance in banks) in a detailed way, also based on the KNF’s observations and BION assessment results. The recommendation is expected to become binding from November 1, 2016.
NO YES
Act on tax on financial institutions
The Act imposes monthly tax of 0.0366% (0.44% annually) from selected financial institutions, including banks. Tax will be calculated based on the assets volume subject to several deductions, including own funds and treasury bonds.
NO YES NO
§ Client & Offer
NO
§ Capital Base
NO
YES
2016
Addresses financial markets functioning, in particular risk mitigator. It requires transactions to be cleared centrally through Central Counterparty and sets margining requirements.
30.06.2016
§ IT & HR resources § Financial result
NO
01.11.2016
§ Capital Base
01.02.2016
Amendment to the Act introduces the cap on maximum level of interchange fee of 0.2% for debit cards and 0.3% for credit cards, beginning from February 1, 2015. In Q4 2015, change concerning transitional period until December 8, 2018 for the small (max 3% market share), eligible payment services was made in order to promote development of Polish payment services companies.
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
§ IT & HR resources § Financial result (without IT/HR costs)
YES NO
§ Client & Offer
NO
§ Capital Base § IT & HR resources § Financial result
NO NO YES
(without IT/HR costs)
§ Client & Offer
YES
§ Capital Base
NO
§ IT & HR resources § Financial result
YES
2018
NO NO YES
MIFID II & MIFIR
YES
2018
Act on payment services
01.02.2015/17.11.2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
The set of ESMA technical standards on transparency requirements for trading venues and investment firms and on the obligation for investment firms to execute transactions in certain shares on a trading venue or a systematic internaliser has been published in 2015. The implementation date is set for January 1, 2018.
(without IT/HR costs)
§ Client & Offer
NO NO
NO NO YES NO
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
Impact of the appreciation of the Swiss franc on the position of borrowers, the banking sector, and mBank
of FX mortgage loan at “fair” rate of exchange, which is calculated by comparison of FX rate at origination, corrected by the accumulated difference in servicing costs of FX mortgage loan in comparison to a similar PLN denominated mortgage loan. Loan restructuring solutions are as follows:
The Polish Banks Association’s proposal Several days after the Swiss franc’s abrupt surge in mid-January 2015 the Polish Banks Association (ZBP) proposed solutions to help CHF borrowers repay inflated credit instalments. The package of solutions included:
§ § § § § §
§ § §
Voluntary conversion, based on terms agreed between a client and a bank. The loan is converted into PLN and switched to WIBOR.
n
Forced conversion of FX mortgage loan at “fair rate”. A loan will stay on bank’s balance sheet in FX, it will be repaid at fixed fair rate of exchange (calculated individually for each loan by a bank, according to the formula described in the bill) and monthly instalments will be based on LIBOR. “Fair” rate exchange cannot be lower than historical rate at which borrower has drawn the obligation, and higher than current exchange rate. The conversion to PLN will be gradual, until the maturity of the loan, but always at the “fair” FX rate. The intention of the President’s Office is to spread the losses of conversion over time, rather than incurring them at once. mBank’s Management Board agrees with the views of various professionals working in the Accounting and Audit industry, namely that under the applicable International Financial Reporting Standards rules the impact caused by this solution would have to be recognized up front.
n
Transfer of the property to the bank, and release of the debtor from the debt only if “voluntary” or “forced” conversion would not have taken place. The borrower, in order to be eligible to transfer the mortgaged property, must meet the following criteria: the amount of loan must be higher than 130% of the loan amount at origination, and monthly instalment needs to exceed 20% of customer’s monthly income. It cannot be applied to individuals:
Taking into account the negative CHF LIBOR Narrowing the currency spread for 6 months Extending the repayment period at the client’s request Not requesting new collateral or loan insurance from the borrowers who repay their instalments on time Converting the loans using the fixing rate of the National Bank of Poland (NBP) Introducing more flexible rules for restructuring mortgage loans applicable to clients.
In May 2015, the ZBP followed up with new measures. Banks declared financial and organisational involvement in the introduction of additional support for clients who took out housing loans, especially loans in foreign currencies. These measures include:
§
n
Extending the applicability period of the first ZBP package by the end of 2015 with an option to extend the applicability of certain solutions even further Setting up internal stabilization funds dedicated solely to CHF borrowers Allocating PLN 125 million from banks’ own resources to the Mortgage Loans Restructuring Support Fund whose creation by way of an act is requested by the banks declaring financial support Making it possible for the borrowers who took out mortgage loans in foreign currencies to meet their own housing needs to transfer mortgage collateral in order to facilitate the sale or exchange of flats.
The subsidies from internal stabilization funds would be granted if the exchange rate of the Swiss franc exceeded a pre-defined threshold. This solution would be available to the borrowers who are ready to undertake to convert their loans at a specified exchange rate and meet the specific income criteria. The support would be addressed to the borrowers whose income at the time of requesting for an amending annex is below the average monthly income in the national economy and whose flat or house is not bigger than 75 or 100 square metres respectively. Another condition is regular repayment. In accordance with the declaration signed by banks, the subsidies would be granted when the CHF exchange rate exceeded PLN 5, yet the amount of the subsidy cannot be higher than PLN 0.33 per 1 CHF. According to ZBP’s estimations, in 10 years the amount of subsidies paid by banks from the stabilization funds would reach approx. PLN 3.5 billion. Certain aspects of the ZBP proposals were later incorporated into the Presidential Bill on the Borrowers Support Fund.
a.
who over the last 12 months had an average income denominated in the currency of the FX loan in the amount sufficient to pay monthly instalments
b.
whose 12-month average monthly instalment is lower than 20% of 12-month average income.
Moreover, banks will be obliged to return FX spreads charged on the clients in the past and pay interest for delayed payment on FX spreads by deducting the amount from the value of outstanding debt. The bill also allows partial deduction of losses connected to the restructuring from the banking tax up to 20% of the monthly tax amount. The unused part of the deduction is cumulated for the future reduction in the banking tax. If a proposal concerning Swiss francs loan conversion is adopted, it might require banks to reflect large write-offs in the financial statements. The costs of conversion are being calculated by Polish Financial Supervision Authority (KNF) before presenting the bill in the Parliament.
The Mortgage Loan Restructuring Support Fund aims at helping mortgage borrowers regardless of the loan currency who found themselves in financial straits due to an adverse event such as unemployment or illness. The support would account for up to 100% of the principal and interest instalment over 12 months, but no more than PLN 1,500 monthly. Except for special cases, the support would be reimbursable. (for more information see table 4.2) Presidential proposal on restructuring of FX loans On January 15, 2016 the President’s Office published his proposal for FX mortgage loans bill proposing the conversion of Swiss franc denominated mortgage loans held by individuals (other than entrepreneurs using loan’s interest as a tax shield) into PLN and ways of compensating borrowers for excessive FX spreads. The proposal includes three mechanisms of loan restructuring. The first two solutions are based on conversion
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mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
mBank S.A. Group Management Board Report on the Performance of mBank Group in 2015
4.3. mBank Group and the Polish banking sector performance in 2015
4.4. Demographic profile of mBank Group clients
mBank’s performance relative to the overall banking sector in 2015 was very strong, as presented in the comparisons of key efficiency and profitability ratios in the following graphs:
mBank stands out with its favourable demographic profile of clients. As a Bank actively using new technologies, mBank has always had a special appeal for younger people, who have been surrounded by technological innovations from a relatively early age. The charts below present the demographic structure of mBank’s clients and the Polish society in 2014:
2.24%
58.4%
mBank: demographic structure >=55
12%
45-54
0.73%
6.8%
13% 2%
15%
35-44 36%
19-24
13%
45-54 26%
25-34
29%
>=55
11%
35-44
